2020 (17), №4

Methodological Problems and Prospects of Modern Institutionalism

For citation: 

Sukharev, O. S. (2020). Methodological Problems and Prospects of Modern Institutionalism. Zhurnal Economicheskoj Teorii [Russian Journal of Economic Theory], 17 (4), 904-921.


The purpose of the study is to identify the main methodological problems of the functioning of modern institutional theory in order to determine the main limitations in its application and describe the key directions for improving the apparatus of this theory in the future. Methodologically, this study relies on generally accepted provisions of institutional theory, retrospective and comparative analysis, taxonomy and generalization method. These methods are used to identify the stages and types of diversification of institutional analysis, its possible causes and their impact on the analytical capabilities of the old and new institutional schools. Thus, the problem of diversification of institutionalism is outlined in relation to methodology of institutional analysis and economic theory. One of the key problems in this respect is associated with the immanent limitations inherent in the formation of the transmission mechanism of macroeconomic policy. This topic also holds much potential for further scrutiny as an independent area within the field of institutional macroeconomics. Approaches to assessing the quality of institutions are described and it is shown that the quality of institutions can significantly affect economic development, although different types of institutions may not be comparable in terms of quality assessment criteria as well as in terms of transaction costs. Measurement of the dysfunction of an institution by looking at the number of non-performing functions can be used to assess institution quality. Together with the assessment of institutional efficiency depending on the number of functions per unit of transaction costs, the above-described method provides relevant parameters that can be taken into account to decide whether a new institution should be introduced or an old one replaced. Contradistinction of the goal of saving transaction costs to the goal of maximizing the value of institutions cannot constitute a point of change in institutional analysis, since the functions of loss and welfare are used simultaneously in economics and no major objections are raised to their application to the analysis of institutions. The article brings to light the problem stemming from the expansion of institutional analysis or the «effect of exceeding complexity», which means that the theoretical constructions and models turn out to be inadequate to the observed economic changes. The analytical potential of institutionalism thus resides in the fact that it can be used to clarify the influence of certain institutional factors on economic changes in the light of specific applied tasks.

PDF full
Downloaded: 29

Oleg Sergeevich Sukharev — Doctor of Economics, Professor, Institute of Economics of the Russian Academy of Sciences (Moscow, Russian Federation; e-mail: o_sukharev@list.ru).

Alle, M. (1995).  Ekonomika kak nauka [Economics as a Science].  Moscow, Russia: Nauka dlya obshchestva, RGGU, 168. (In Russ.)

Blaug, M. (2004).  Metodologiya ekonomicheskoy nauki ili kak ekonomisty ob’’yasnyayut [The Methodology of Economics: Or How Economists Explain].  Moscow, Russia: NP «Zhurnal Voprosy ekonomiki», 416. (In Russ.)

Brennan, G., & Buchanan, J. (2005).  Prichina pravil. Konstitutsionnaya politicheskaya ekonomiya [The Reason of Rules: Constitutional Political Economy].  SPb., Russia: Ekonomicheskaya shkola, 272. (In Russ.)

Boyer, R. (1997).  Teoriya regulyatsii [Regulation theory].  Moscow, Russia: Nauka dlya obshchestva, RGGU, 212. (In Russ.)

Veblen, T. (2011).  Teoriya prazdnogo klassa [The theory of the leisure class].  Moscow, Russia: Librokom, 368. (In Russ.)

Galbraith, J. K. (2009).  Ekonomika nevinnogo obmana [The Economics of innocent fraud].  Moscow, Russia: Izdatel’stvo «Evropa», 88. (In Russ.)

Kleiner, G. B. (2004).  Evolyutsiya institutsional’nykh system [The Evolution of Institutional Systems].  Moscow, Russia: Nauka, 240. (In Russ.)

Commons, J. (2011).  Pravovye osnovaniya kapitalizma [Legal foundations of Capitalism].  Moscow, Russia: Izdatel’skiy dom «Vysshaya shkola ekonomiki», 416. (In Russ.)

Nelson, R., & Winter, S. (2000).  Evolyutsionnaya teoriya ekonomicheskikh izmeneniy [An Evolutionary Theory of Economic change].  Moscow, Russia: Finstatinform, 474. (In Russ.)

North, D. (2010).  Ponimanie protsessa ekonomicheskikh izmeneniy [Undertsanding the Process of Economic Change].  Moscow, Russia: Izdatel’skiy dom «Vysshaya shkola ekonomiki», 256. (In Russ.)

North, D. (1997).  Instituty, institutsional’nye izmeneniya i funktsionirovanie ekonomiki [Institutions, Institutional Change and Economic Performance].  Moscow, Russia: Fond ekonomicheskoy knigi «Nachala», 180. (In Russ.)

Olson, M. (2013).  Vozvyshenie i upadok narodov. Ekonomicheskiy rost, stagflyatsiya i sotsial’nyy skleroz [The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities].  Moscow, Russia: Novoe izdatel’stvo, 324. (In Russ.)

Ostrom, E. (2010).  Upravlyaya obshchim. Evolyutsiya institutov kollektivnoy deyatel’nosti [Governing the Commons: The Evolution of Institutions for Collective Action].  Moscow, Russia: Mysl’, 447. (In Russ.)

Orekhova, S.V. (2016). Teoreticheskaya model’ analiza institutsional’noy sredy otraslevykh rynkov [The theoretical model of the institutional environment industry markets analysis].  Teoreticheskaya i prikladnaya ekonomika [Theoretical and Applied Economics], 3,  164–176. (In Russ.)

Popov, E.V. (2007).  Evolyutsiya institutov miniekonomiki [Evolution of the institutions of mini-economy].  Moscow, Russia: Nauka, 542. (In Russ.)

Sukharev, O. S. (2001).  Institutsional’naya teoriya i ekonomicheskaya politika. K novoy teorii peredatochnogo mekhanizma v makroekonomike [Institutional theory and economic policy. Towards a new theory of the transmission mechanism in macroeconomics].  Moscow, Russia: IE RAN, 576. (In Russ.)

Sukharev, O. S. (2000).  Ekonomicheskie ocherki po institutsional’noy teorii i politike reformizma [Economic Essays on Institutional Theory and Policy of Reformism].  Bryansk, Russia: BGTU, 190. (In Russ.)

Sukharev, O. S. (2005).  Instituty i ekonomicheskoe razvitie [Institutions and economic development].  Moscow, Russia: DeKa, 378. (In Russ.)

Sukharev, O. S. (2019).  Ekonomicheskaya teoriya evolyutsii institutov i tekhnologiy [Economic theory of the institutions and technologies evolution].  Moscow, Russia: Lenand, 312. (In Russ.)

Hodzhson, G. (2003).  Ekonomicheskaya teoriya i instituty. Manifest sovremennoy institutsional’noy ekonomicheskoy teorii [Economics and Institutions: A Manifesto for a Modern Institutional Economics].  Moscow, Russia: Delo, 464. (In Russ.)

Shiller, R. (2017).  Irratsional’nyy optimism [Irrational Exuberance].  Moscow, Russia: Al’bina Pablisher, 418. (In Russ.)

Eggertsson, T. (2001).  Ekonomicheskoe povedenie i instituty [Economic behavior and Institutions].  Moscow, Russia: Delo, 408. (In Russ.)

Bicen, P., & Malter, A. J. (2019).  The new institutional economics (NIE) approach to geographical indication (GI) supply chains: A case study from Turkey.  Case Studies in Food Retailing and Distribution, 105–118.

Coase, R. (1994).  Essays on Economics and Economists.  University of Chicago Press, 222.

Coase, R. (1992). The Institutional Structure of Production (Nobel Prize lecture).  The American Economic Review, 82(4),  713–719.

Eggertsson, T. (2013). Quick guide to New Institutional Economics.  Journal of Comparative Economics, 41(1),  1–5.

Hodgson, G. M., & Knudsen, Th. (2010).  Darwin’s Conjecture: The Search for General Principles of Social and Economic Evolution.  University of Chicago Press, 290.

Hodgson, G. M. (2013). Observations on the legal theory of finance.  Journal of Comparative Economics, 41(2),  331–337.

Hove, S., Tchana, F. T., & Mama, A. T. (2017). Do monetary, fiscal and financial institutions really matter for inflation targeting in emerging market economies?  Research in International Business and Finance, 39,  Part A, 128–149.

Jouida, S., & Hellara, S. (2018). Diversification and target leverage of financial institutions.  Journal of Multinational Financial Management, 46,  11–35.

McKillop, D., French, D., Quinn, B., Sobiech, A. L., & Wilson, J. O. S. (2020). Cooperative financial institutions: A review of the literature.  International Review of Financial Analysis, 71.

Meador, J. E., & Skerratt, S. (2017). On a unified theory of development: New institutional economics & the charismatic leader.  Journal of Rural Studies, 53,  144–155.

Ménard, C. (2018). Research frontiers of new institutional economics.  RAUSP Management Journal, 53(1),  3–10.

Myrdal, G. (1990).  The Political Element in the Development of Economic Theory.  Transaction publishers, 298.

North, D. (1991). Institutions.  The Journal of Economic Perspectives, 5(1),  97–112.

North, D. (2008).  Institutional Change and American Economic Growth.  Cambridge University Press; Reissue edition, 292.

Ostrom, E. (2005).  Understanding Institutional Diversity.  Princeton University Press, 376.

Prévost, B., & Rivaud, A. (2018). The World Bank’s environmental strategies: Assessing the influence of a biased use of New Institutional Economics on legal issues.  Ecosystem Services, 29,  Part B, 370–380.

Tinbergen, J. (1981). The Use of Models: Experience and Prospects.  The American Economic Review, 71(6),  17–22.

Tinbergen, J. (1992).  Entering the third millennium: some suggestions.  Rotterdam, 40.

Tinbergen, J. (1995). The Duration of Development.  Journal of Evolutionary Economics, 5(3),  333–339.

Vega, D. E. C., & Keenan, R. J. (2016). Situating community forestry enterprises within New Institutional Economic theory: What are the implications for their organization?  Journal of Forest Economics, 25,  1–13.

Williamson, O. E. (1975).  Markets and Hierarchies: Analysis and Anti-Trust Implications: A Study in the Economics of Internal organization.  New York, NY: Free Press [u.a.], 286.

Williamson, O. E. (1998).  The Economic Institutions of Capitalism.  New York: Free Press, 468.

Williamson, O. E. (2002). The Theory of the Firm as Governance Structure: From Choice to Contract.  Journal of Economic Perspectives, 16 (3),  171–195.